Organisational Structure and International Expansion of TESCO

This presentation discusses the organizational structure and functions of TESCO, the factors affecting its international expansion, and the impact of digital technology on business growth. It includes a PESTLE analysis and SWOT analysis of TESCO, as well as an overview of various types of organizational structures. The presentation is relevant for students studying business, management, and international trade.

ORGANISATIONAL STRUCTURE AND INTERNATIONAL/GLOBAL EXPANSION
STUDENT NUMBER -

Table of contents
• Introduction
• TESCO that has expanded into international markets,
• Types of organisational structures
• Organisational structure of TESCO
• Influences/factors that have affected international expansion of
• PESTLE Analysis of TESCO
• SWOT Analysis of TESCO organisation:
• Impact of digital technology on the international business
• Conclusion
• References

Introduction
Organizational structure refers to organizational planning that includes branches, departments and activities in
which organizational activities take place. The global change with international trade is a growth process that
is supported by a strong organizational framework. This presentation will provide an overview of the
organizational structure and functions of TESCO. In addition, the report will address the company's various
needs to assess market conditions for its growth in the international market. Finally, this report will highlight
the effects of digital technology on business growth activities.

1) TESCO that has expanded into international markets
TESCO is a grocery store and retail organization based in Welwyn garden, London, founded in 1919. The
company's structure is very strong which has helped the organization to grow its business in many countries around
the world. The organisation is mainly involved in its retail business across eleven countries with its almost 4600
shops making it the third largest retailer in the world.

Various activities across TESCO
There are several business functions at TESCO that are as follows:
• Financial function: TESCO's financial function covers a wide
range of functions such as organizing the organization's financial
policy, financial management, production costs, credit facility,
accounting, debts and salary management and customer payments.
• Marketing and sales: TESCO's marketing function has a major
responsibility to increase sales of the company's products. There
are other organizational marketing activities, including export
management, advertising, market research, etc.
• Production Function: This activity is closely related to obtaining
production tools and services at low cost to maximize
organizational profits.

Types of Organizational Structure
In particular there are seven types of organizational structures that are as follows:
• Hierarchal organization structures: Contains a pyramid structure or a hierarchal structure in which the upper
person has higher authority and power which declines gradually as it descends.
• Functional organizational structures: This is similar to hierarchical structure but in this case with authority,
responsibility is at the same level and decreases gradually as it goes down.
• Horizontal organizational structure: It is the organizational structure with full organizational authority and
responsibility in which a senior manager manages all his subordinates.
• Divisional organizational structure: This type of organizational structure consists of the departments in
which they build their operating system in order to complete the task in consultation with other departments.
• Organizational structure of matrix form: This type of organization consists of collaborative relationships in
which all employees work effectively by working with each member.
• Team-based organizational structure: This type of organizational structure involves working in a group
where a few people with different skills are divided into one group to do the work.

Organizational Structure Chosen by Tesco
The TESCO organizational structure follows hierarchical structure in which the structure, position and
responsibility are divided from top to bottom to ensure proper co-operation. The flow of authority and
responsibility from top to bottom, means that the higher person will have greater authority over his subordinates
and have greater responsibility on him.

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Influences/factors that have affected international expansion of TESCO

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The critical drivers of globalisation are identified below:
• Technological drivers: Rapid technological change is among the key issues in TESCO's global trade. The
development of ships, vast area network, cointaineering, low area network, cell phones, cellular network and
the Internet has facilitated international communication and led to a global trade process.
• Government / political drivers: As a result of international freedom policy the economies has witnessed less
challenges to global trade. The General Agreement on Taxes and Trade (GATT) established in 1947 and the
establishment of the World Trade Organization (WTO) in 1995 opened doors to companies in connection with
the united world trade.
• Market Drivers: Customer demand has grown significantly with availability of various products available
worldwide. This creates a need for markets to grow internationally and to opt for international trade.
• Cost drivers: The fact that product cost varies from place to place due to the availability of components
needed to produce the product. A major responsible feature of TESCO's international operations is the
availability of low-cost products to customers.

PESTLE
PORTERS 5 FORCES
SWOT/ VALUE CHAIN/VIRO

PESTLE Analysis of TESCO
PESTLE is framework which helps to evaluate external environmental factors that affect the industry and
companies or firms in an industry. Organizations such as TESCO can carefully evaluate these factors to determine
threats and organizational opportunities for effective growth. The PESTEL analysis is as follows:
• Political factors refer to those government-created situations such as tax policies, trade restrictions,
international exchange prices, etc. that affect the business.
• Economic factors are those economic conditions which includes factors that directly affects the economic
conditions of an area such as inflation, employment rate and other economic factors affecting the business.
• Social factors are the trends and practices that exist in the community or culture and that affect people's choices
that influence the organization's performance in a particular area.
• Technological factors: Legal factors:
• Environmental factors

SWOT Analysis of TESCO
STRENGTHS WEAKNESSES
 Strong foothold in the market and higher brand value
 Biggest grocery retailer in the UK
 Diversity of products and huge market area
 Huge market coverage and GDP contribution
 Europe’s largest private employer
 Located at multiple places
 Efficient supply chain
 Failed to grow in many countries
 Fraudent activities and court trials
 Decreased operational profits
 Low cost strategy
 Infelicitous Product recalls
 Poor operational performance in certain countries
 Unfair trade practices
OPPORTUNITIES THREATS
 Chances for strategic alliances
 Joint private/public ventures internationally
 Introduction to Online Businesses
 Emerging new economies
 Cashless selling
 Price comparison with global economy
 Challenges for international growth
 Legality threat due to ‘fake farm’ issue
 Brexit situational crisis
 Competition and challenges from supermarket giants
 Economic or credit crunches or shortages
 Supply chain across borders internationally

Impact of digital technologies have on their international expansion strategy?
The biggest changes in the world are related to digital technology that occurred in last two decades.
Digital technology is a major factor in development. They also have an impact on public health. The
organisation communicate directly or indirectly, by new innovations, for example, TV or use an online
bank etc. One of the highlights of digital technology is related to the communication and transfer of data.
Technology has made it possible to use communication tools in the field of creating awareness that allow
for the commencement and rise of awareness. Digital advancements creates a virtual world across us that
seems real to humans because of the features that define the player in the visual environment. This has
helped TESCO's development as an international business and expanded its operations in many countries.

Conclusion
It is concluded from the above report that organizational structure plays a very important role in
determining the performance of the organization in the international markets. In the above report it is
found that various operational activities, such as finance, manufacturing, marketing etc. are performed by
the business. Also, the report provided various organizational structures such as hierarchical structure, flat
structure etc. which can be accepted by the organization. In addition, the report provides a detailed
analysis of the various components of foreign trade. In addition, the report provided PESTEL analysis
and SWOT analysis to assess environmental factors in domestic and foreign markets during international
operations. Correspondingly, the report highlighted the role of digital business in foreign trade.

References
• Demir, R. and et. al., 2021. Strategic agility, internationalisation speed and international success—The role of
coordination mechanisms and growth modes. Journal of International Management, 27(1). p.100838.
• Engel, L.C., Maxwell, C. and Yemini, M. eds., 2019. The machinery of school internationalisation in action:
Beyond the established boundaries. Routledge.
• Fonfara, K. and et. al. eds., 2019. The Internationalisation Maturity of the Firm: A Business Relationships
Perspective. Cambridge Scholars Publishing.
• Jafari-Sadeghi, V. and et. al., 2020. Internationalisation business processes in an under-supported policy
contexts: evidence from Italian SMEs. Business Process Management Journal.
• Kriz, A. and Welch, C., 2018. Innovation and internationalisation processes of firms with new-to-the-world
technologies. Journal of International Business Studies, 49(4). pp.496-522.
• Masroor, I. and et. al., 2020. Moderating effect of uncertainty on the relationship between effectuation and
internationalisation speed: a study on small and medium software firms of Bangladesh. International Journal of
Export Marketing, 3(3). pp.261-286.

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